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Strategic Obfuscation and Consumer Protection Policy

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  • Yiquan Gu
  • Tobias Wenzel

Abstract

type="main"> This paper studies obfuscation decisions by firms. We show that more prominent firms are more likely to obfuscate. While prominent firms always choose maximum obfuscation, the obfuscation by less prominent firms depends on the degree of asymmetry in prominence and consumer protection policy. We evaluate the impact of a consumer protection policy that limits the scope of obfuscation. We show that such a policy may not be effective as less prominent firms may increase their obfuscation practice.

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  • Yiquan Gu & Tobias Wenzel, 2014. "Strategic Obfuscation and Consumer Protection Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 62(4), pages 632-660, December.
    • Handle: RePEc:bla:jindec:v:62:y:2014:i:4:p:632-660
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    3. Chioveanu, Ioana, 2020. "A more general model of price complexity," International Journal of Industrial Organization, Elsevier, vol. 69(C).
    4. Ashkan Eshghi & Ram D. Gopal & Hooman Hidaji & Raymond A. Patterson, 2023. "Now You See It, Now You Don’t: Obfuscation of Online Third-Party Information Sharing," INFORMS Journal on Computing, INFORMS, vol. 35(2), pages 286-303, March.
    5. Gu, Yiquan & Wenzel, Tobias, 2020. "Curbing obfuscation: Empower consumers or regulate firms?," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    6. Rasch, Alexander & Wenzel, Tobias, 2015. "The impact of piracy on prominent and non-prominent software developers," Telecommunications Policy, Elsevier, vol. 39(8), pages 735-744.
    7. K. Jeremy Ko & Jared Williams, 2017. "The Effects of Regulating Hidden Add‐On Costs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 49(1), pages 39-74, February.
    8. Michael Grubb, 2015. "Failing to Choose the Best Price: Theory, Evidence, and Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(3), pages 303-340, November.
    9. Gu, Yiquan & Wenzel, Tobias, 2015. "Putting on a tight leash and levelling playing field: An experiment in strategic obfuscation and consumer protection," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 120-128.
    10. Johannes Johnen & David Ronayne, 2021. "The only Dance in Town: Unique Equilibrium in a Generalized Model of Price Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 69(3), pages 595-614, September.
    11. Sandro Shelegia & Chris M. Wilson, 2016. "A Generalized Model of Sales," Working Papers 934, Barcelona School of Economics.
    12. Samir Mamadehussene & Francisco Silva, 2023. "Modeling Competition over Multiple Variables under Limited Consumer Awareness," Journal of Industrial Economics, Wiley Blackwell, vol. 71(1), pages 192-211, March.
    13. Peter Seele & Claus Dierksmeier & Reto Hofstetter & Mario D. Schultz, 2021. "Mapping the Ethicality of Algorithmic Pricing: A Review of Dynamic and Personalized Pricing," Journal of Business Ethics, Springer, vol. 170(4), pages 697-719, May.
    14. Yiquan Gu & Tobias Wenzel, 2017. "Consumer confusion, obfuscation and price regulation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(2), pages 169-190, May.
    15. Vasudha Jain & Mark Whitmeyer, 2021. "Search and Competition with Flexible Investigations," Papers 2104.13159, arXiv.org.
    16. Chioveanu, Ioana, 2019. "Prominence, complexity, and pricing," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 551-582.
    17. Karpov, Aleksandr, 2017. "Price competition and limited attention," Economics Discussion Papers 2017-89, Kiel Institute for the World Economy (IfW Kiel).
    18. Chioveanu Ioana, 2019. "An Asymmetric Duopoly Model of Price Framing," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 19(2), pages 1-7, June.
    19. Samir Mamadehussene, 2020. "The Interplay Between Obfuscation and Prominence in Price Comparison Platforms," Management Science, INFORMS, vol. 66(10), pages 4843-4862, October.
    20. Papi, Mauro, 2018. "Price competition with satisficing consumers," International Journal of Industrial Organization, Elsevier, vol. 58(C), pages 252-272.
    21. Kenan Kalaycı, 2016. "Confusopoly: competition and obfuscation in markets," Experimental Economics, Springer;Economic Science Association, vol. 19(2), pages 299-316, June.
    22. David Ronayne, 2020. "The Only Dance in Town: Unique Equilibrium in a Generalized Model of Price Competition," Economics Series Working Papers 874, University of Oxford, Department of Economics.
    23. Francisco Silva & Samir Mamadehussene, 2020. "The Equivalence Between Sequential and Simultaneous Firm Decisions," Documentos de Trabajo 541, Instituto de Economia. Pontificia Universidad Católica de Chile..

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